The banking industry is about to face a harsh reality of artificial intelligence (AI), as a recent Bloomberg Intelligence (BI) survey reveals that Wall Street could see up to 200,000 job cuts in the next three to five years. All thanks to the simple shift towards AI, which is now taking over roles traditionally performed by human employees.
According to the BI survey, global banks are expected to have a workforce reduction of about 3% on average.
Tomasz Noetzel, the BI senior analyst who wrote the report, asserts that the back office, middle office, and operations are likely to be at the highest risk. Even customer services could see changes as well, while know-your-customer duties are also vulnerable.
“Jobs involving routine and repetitive tasks are at the highest risk,” Noetzel stated. However, he emphasized that AI’s impact would not be solely about job elimination but also about transforming the workforce.
Bloomberg Intelligence’s projections suggest that by 2027, banks could experience a pretax profit increase of 12% to 17%, potentially boosting their collective bottom line by an additional $180 billion, thanks to enhanced productivity through AI.
This forecast aligns with insights from ten respondents who, as reported by News18, expect generative AI to boost productivity and revenue by at least 5% in the upcoming three to five years.
This is possible as banks are modernizing their IT systems to speed up their processes and cut costs in the wake of the financial crisis.
In June last year, Citi highlighted in its report that AI is likely to displace more jobs across the banking industry than in any other sector. About 54% of jobs across banking have a high possibility of being automated.
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